Financial crisis has set up investment opportunities in Asia: Henderson Funds

 

SINGAPORE: Henderson Global Investors said the global financial crisis may have been the best thing that has happened to Asia.

It believes the crisis has helped the region move away from being too export-dependent and develop its own economic drivers.

Henderson said it has already created investment opportunities in various sectors including property and financials especially in China.

Many Asian economies benefitted from an export boom in the few years before the global economic crisis in 2008.

But the crisis caused a sharp drop in exports as consumption in the West dropped and showed no signs of returning to the strong levels previously.

Henderson said there is a silver lining from the crisis for Asia because policy makers were forced to pump-prime their economies by spending on infrastructure and focus on potential growth areas.

Michael Kerley, director of Pan Asian Equities, Henderson Global Investors, said: “It's made Asian governments focus on other areas other than exports. Growth in Asia over the last 10 years has been export-led.

“Going forward we won't be able to rely on those exports as a region because US consumption and European consumption are unlikely to be as strong as we've seen. So the Asian governments need to focus on other areas.

“So focusing on investment and domestic consumption, I think ultimately gives us the goal of being more evenly balanced in terms of growth profile, more structural and less reliant on the global cycle and I think that should be welcomed."

In terms of Asian equities, Henderson is especially optimistic on sectors like property, financials, industrials, and telecoms.

And it has recently been positioning its funds towards these segments especially in Chinese properties and banks which it believes have been oversold.
Property and financials now make up about 38 per cent of its Asian Dividend Income Fund.

Mr Kerley said: “The real value opportunity at the moment is China. It's underperformed for eight to nine months. The market is roughly trading at 20 to 25 per cent discount and I think to its average and to the region as a whole.

“We've been adding Chinese properties. The banks and property have been quite weak. Considering that the markets have oversold these on worries of interest rates changes and policy initiatives, this is where the opportunities lie.”

Henderson also believes that Asian banking stocks are attractive because of their dividend outlook.

For example, it said that total dividends paid by banks in Asia last year were higher at around US$20 billion than banks in the US, Europe or UK.

And the dividend yield growth for Asia Pacific region ex-Japan for the past 10 years has been around seven per cent compared to the less than three per cent growth seen in the US, EU and UK. - CNA/vm